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CES In The News
Los Angeles Daily News
Thursday March 30, 2006
L.A. area rents high - and climbing higher
Forecast: Big demand, low vacancy drive rise
By Kerry Cavanaugh,
Staff Writer

Los Angeles-area rents, already among the nation's highest, jumped by 7 percent in 2005, and a similar bump this year is expected to push the average monthly rent to more than $1,500, according to a University of Southern California forecast released today.

The run-up in rent is fueled by high demand for apartments and few vacancies. About 97 percent of the region's apartments are currently occupied.

Additionally, an increasing number of apartments are being converted to condominiums, further reducing the number of rentals available.

"The supply of apartments now is really tight. Demand is still so strong and people have to find a place to live," said Delores Conway, director of the Casden Real Estate Economic Forecast at USC's Lusk Center for Real Estate.

She observed the hot market last summer when USC students were on the hunt for affordable rentals.

"All the students were arriving and they were having a hard time finding apartments because they would go there, and if they didn't take (the unit) right away, it was gone."

Apartment building owner and manager Christopher Spencer doesn't need a study to tell him demand - and rents - are up. The real estate investor recently listed an Encino studio apartment for $995 and received 51 inquiries. The interest allows him to be "super picky" about his tenants. If someone shows up late for an appointment to view the unit or is not polite during the visit, he or she is disqualified. Bad credit or past eviction? Also disqualified. Sometimes, Spencer said, he'll allow prospective renters to bid on a unit.

"A lot of times I'll get a higher offer than I asked, if the unit is really clean or in a good location," he said.

Units in high-demand neighborhoods, such as Encino, often go for more than the San Fernando Valley's average rent of $1,355 per month - a 9 percent increase over the Valley's 2004 average monthly rent. The average rent for Los Angeles County is $1,416 - 7 percent more than in 2004. San Francisco is the only California city with higher rents. That's also a significant boost compared to 2003 and 2004, when the average rents only increased around 3.5 percent.

"It's the condo conversions," Conway explained, referring to the process of turning rental apartments into for-sale condominiums. With single-family homes so expensive, more buyers are looking at condos as a more affordable way to become a homeowner.

"We've seen so much activity in terms of condo conversion and that's reduced the supply of apartments. It has tightened the market. It's pushing up occupancy rates and increasing rents," she said.

That troubles Larry Gross, executive director of the Coalition for Economic Survival
, who counts 5,000 units in the Los Angeles area converted to condos in the last five years. He sees more low-income families forced to leave Los Angeles or move further from their jobs in order to afford a home.

"It has a ripple effect. If they build condos and take affordable housing off the market, then they need to make sure affordable housing is replaced," he said.


There are more than 9,000 units under construction in the city of Los Angeles and neighboring Glendale, Burbank and Pasadena. But many of these new rentals are high-end and luxury buildings, Conway said.

Indeed, the average rent in Glendale, Pasadena and Burbank climbed 15 percent to $1,555, largely because of new, high-end buildings that opened to tenants last year.


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